Dj Nisource Inc. Stock Outperforms Competitors Despite Losses On The Day

New Jersey Resources NJR continues to benefit from its investments in infrastructure that help serve its expanding customer base more efficiently. Given its earnings growth opportunities and strong return on equity (ROE), NJR makes for a solid investment option in the utility sector.

Let’s focus on the factors that make this Zacks Rank #2 (Buy) company a strong investment pick at the moment.

NJR’s Growth Projections

The Zacks Consensus Estimate for fiscal fourth-quarter 2024 earnings per share (EPS) has moved up 3.5% in the past 90 days to 89 cents.

The Zacks Consensus Estimate for sales is pinned at $406.97 million, indicating year-over-year growth of 22.8%.

NJR’s Return on Equity

ROE indicates how efficiently a company has been utilizing the funds to generate higher returns. Currently, New Jersey Resources’ ROE is 11.06%, higher than the industry’s average of 9.29%. This indicates that the company has been utilizing the funds more constructively than its peers in the utility gas distribution industry.

NJR’s Solvency

The time-to-interest earned ratio at the end of the fiscal third quarter was 3.3. The ratio, being greater than one, reflects the company’s ability to meet future interest obligations without difficulties.

NJR’s Dividend Growth

New Jersey Resources has been increasing shareholders' value by paying dividends. NJR has paid quarterly dividends continuously since its inception in 1952, and has raised the dividend every year for the past 29 years. In September 2024, the company’s board of directors approved a 7.1% increase in quarterly dividend rate. The new quarterly dividend is 45 cents per share, resulting in an annualized dividend of $1.80 per share compared with the previous figure of $1.68. The company’s current dividend yield is 3.79%, better than the Zacks S&P 500 composite’s 1.19%.

NJR’s Systematic Investments & Customer Growth

New Jersey Resources makes consistent investments to upgrade and maintain its existing infrastructure. The idea is to provide reliable services to its customers around the clock. The company expects capital expenditures to be in the range of $495-$675 million for fiscal 2025.

The company added 5,939 new customers during the first nine months of fiscal 2024 compared with 5,892 in the corresponding period of fiscal 2023. It expects these new customers to contribute nearly $5.1 million of incremental utility gross margin on an annualized basis.

NJR’s Price Performance

In the past month, shares of the company have risen 3.3% against the sector’s 1.1% decline.

Other Stocks to Consider

A few other top-ranked stocks from the same sector are ONE Gas, Inc. OGS, Atmos Energy ATO and NiSource NI, each holding a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

OGS’ long-term earnings growth rate is 5%. The Zacks Consensus Estimate for OGS’s fourth-quarter sales indicates an increase of 8.9% from the year-ago’s registered figure.

ATO’s long-term earnings growth rate is 7%. The company delivered an average earnings surprise of 3.4% in the past four quarters.

NI’s long-term earnings growth rate is 6.95%. The Zacks Consensus Estimate for NI’s 2024 EPS indicates year-over-year growth of 8.1%.

Zacks Investment Research

ONE Gas, Inc. OGS continues to benefit from strategic investments, 100% regulated operation and an expanding customer base. Given its growth opportunities, OGS makes for a solid investment option in the utility sector.

Let’s focus on the factors that make this Zacks Rank #2 (Buy) company a strong investment pick at the moment.

OGS’ Growth Projections

The Zacks Consensus Estimate for 2024 earnings per share (EPS) has increased 0.8% in the past 30 days to $3.87.

The Zacks Consensus Estimate for fourth-quarter 2024 sales is pinned at $660.1 million, indicating a year-over-year increase of 8.9%.

OGS’ long-term (three to five years) earnings growth rate is 5%.

Debt Position of OGS

Currently, ONE Gas’ total debt to capital is 43.44%, better than the industry’s average of 49.59%.

The time-to-interest earned ratio at the end of the third quarter of 2024 was 2.9. The ratio, being greater than one, reflects the company’s ability to meet future interest obligations without difficulties.

OGS’ Dividend History

Regular investment in a fully regulated company and its ability to generate sufficient cash flows will support management’s plans of rewarding its shareholders with an average annual dividend increase of 1-2% through 2028, subject to the approval of the board of directors. Currently, ONE Gas’ quarterly dividend is 66 cents per share, resulting in an annualized dividend of $2.64. The company’s current dividend yield is 3.6%, better than the Zacks S&P 500 composite’s 1.19%.

OGS’ Systematic Investments

The company expects capital expenditures, including asset removal costs, to be nearly $750 million in 2024 and $4.25 billion through 2028. Nearly $3 billion of the planned capital expenditures will be directed toward system integrity and replacement projects.

OGS’ Customer Growth

ONE Gas’ 2024 total capital investments include nearly $170 million for customer growth. The company has been steadily increasing its customer base every year since 2015 and expects an average annual customer growth of 0.9% for 2024-2028 across its service territories. For the first nine months ended Sept. 30, 2024, OGS’ average customer count included nearly 16,000 new connections.

OGS’ Price Performance

In the past six months, the stock has risen 14.9% compared with the industry’s 13.4% growth.

Other Stocks to Consider

A few other top-ranked stocks from the same sector are Atmos Energy ATO, New Jersey Resources NJR and NiSource NI, each holding a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ATO’s long-term earnings growth rate is 7%. The company delivered an average earnings surprise of 3.4% in the past four quarters.

The Zacks Consensus Estimate for NJR’s fiscal 2024 EPS indicates year-over-year growth of 10.1%. The Zacks Consensus Estimate for NJR’s fiscal 2024 sales indicates a decline of 7.9% from the previous year’s registered figure.

NI’s long-term earnings growth rate is 6.95%. The Zacks Consensus Estimate for NI’s 2024 EPS indicates year-over-year growth of 8.1%.

Zacks Investment Research

Believe it or not, seniors fear running out of cash more than they fear dying.

Also, retirees who have constructed a nest egg have valid justifications to be concerned, since the traditional ways to plan for retirement may mean income can no longer cover expenses. Some retirees are now tapping their principal to make a decent living, pressed for time between decreasing investment balances and longer life expectancies.

The tried-and-true retirement investing approach of yesterday doesn't work today.

In the past, investors going into retirement could invest in bonds and count on attractive yields to produce steady, reliable income streams to fund a predictable retirement. 10-year Treasury bond rates in the late 1990s hovered around 6.50%, whereas the current rate is much lower.

The effect of this drop in rates is substantial: over 20 years, the change in yield for a $1 million investment in 10-year Treasuries is over $1 million.

Today's retirees are getting hit hard by reduced bond yields - and the Social Security picture isn't too rosy either. Right now and for the near future, Social Security benefits are still being paid, but it has been estimated that the Social Security funds will be depleted as soon as 2035.

How can you avoid dipping into your principal when the investments you counted on in retirement aren't producing income? You can only cut your expenses so far, and the only other option is to find a different investment vehicle to generate income.

Invest in Dividend Stocks

As we see it, dividend-paying stocks from generally low-risk, top notch companies are a brilliant way to create steady and solid income streams to supplant low risk, low yielding Treasury and fixed-income alternatives.

Look for stocks that have paid steady, increasing dividends for years (or decades), and have not cut their dividends even during recessions.

One way to identify suitable candidates is to look for stocks with an average dividend yield of 3%, and positive average annual dividend growth. Many stocks increase dividends over time, helping to offset the effects of inflation.

Here are three dividend-paying stocks retirees should consider for their nest egg portfolio.

First American Financial (FAF)

is currently shelling out a dividend of $0.54 per share, with a dividend yield of 3.45%. This compares to the Insurance - Property and Casualty industry's yield of 0.13% and the S&P 500's yield of 1.48%. The company's annualized dividend growth in the past year was 1.89%. Check First American Financial dividend history here>>>

NiSource (NI)

is paying out a dividend of $0.27 per share at the moment, with a dividend yield of 3.01% compared to the Utility - Electric Power industry's yield of 3.29% and the S&P 500's yield. The annualized dividend growth of the company was 6% over the past year. Check NiSource dividend history here>>>

Currently paying a dividend of $0.5 per share,

Portland General Electric (POR)

has a dividend yield of 4.24%. This is compared to the Utility - Electric Power industry's yield of 3.29% and the S&P 500's current yield. Annualized dividend growth for the company in the past year was 5.26%. Check Portland General Electric dividend history here>>>

But aren't stocks generally more risky than bonds?

Yes, that's true. As a broad category, bonds carry less risk than stocks. However, the stocks we are talking about - dividend -paying stocks from high-quality companies - can generate income over time and also mitigate the overall volatility of your portfolio compared to the stock market as a whole.

An upside to adding dividend stocks to your retirement portfolio: they can help lessen the effects of inflation, since many dividend-paying companies (especially blue chip stocks) generally increase their dividends over time.

Thinking about dividend-focused mutual funds or ETFs? Watch out for fees.

You may be thinking, "I like this dividend strategy, but instead of investing in individual stocks, I'm going to find a dividend-focused mutual fund or ETF." This approach can make sense, but be aware that some mutual funds and specialized ETFs carry high fees, which may reduce your dividend gains or income, and defeat the goal of this dividend investment approach. If you do wish to invest in a fund, do your research to find the best-quality dividend funds with the lowest fees.

Bottom Line

Seeking steady, consistent income through dividends can be a smart option for financial security in retirement, whether you invest in mutual funds, ETFs, or in dividend-paying stocks.

Zacks Investment Research